Cloudflare, Inc. NET

The business

Cloudflare runs a global edge network that sits in front of a large share of the public internet and sells three overlapping things on top of it: security (web application firewall, DDoS mitigation, and Zero Trust access), performance (content delivery and DNS), and a developer platform (Workers serverless compute, storage, and increasingly AI inference run at the edge). Customers range from free hobbyists to the largest enterprises, and the money is concentrated at the top: the 4,416 customers paying more than $100,000 a year are now 72% of revenue and grew 38% year over year, while the cohort spending over $5 million a year grew 50%. So the engine is large-enterprise land-and-expand, not the free tier that seeds it. Reported revenue is clean subscription revenue with no material pass-through, so the P&L trend table below uses that single basis across all years.

The qualitative fact the financials do not yet show is the mix shift the market is paying for. Dollar-based net retention was 118% in Q1 2026, up 7 percentage points year over year but still short of the 125%-plus that hypergrowth infrastructure names print at their peak, which tells you expansion is healthy but not accelerating to euphoric levels. What changed in the last two quarters is two things: management is pushing Workers AI and edge inference as the next revenue leg, and on May 7, 2026 it announced a roughly 20% workforce reduction (about 1,100 roles) to move to an "agentic AI-first" operating model, taking a $140 million to $150 million charge. That is simultaneously a cost-and-margin signal and an admission that the prior cost base was too heavy for the cash the business throws off.